INCOME TAX ACT, 1961

Section 226

Recovery - Stay of demand - Lockdown owing to COVID 19 pandemic -

AO assessed the return of assessee by rejecting the return and estimated the income and raised a demand. Assessee preferred an appeal before CIT(A). Section 226 empowers AO to stay the demand. Since the petitioner did not deposit any amount, provisions of sub section (3) of section 226 was invoked by issuing a communication of garnishee. Though assessee should have been advised to prefer a stay application in a pending appeal as the necessity to file the application under section 226 before AO had become futile on account of the garnishee notice, assessee might be granted sufficient time to file a stay application enabling him to press for the stay before appellate authority, in accordance with law Held: Assessee was not advised properly in seeking stay of the demand by submitting an application as it was post the issuance of garnishee Notice. In fact, an application for stay or simple prayer for stay along with the pending appeal ought to have been preferred before CIT(A). Be that as it may, assessee had undertaken to file the application for stay and as there was lockdown owing to the COVID 19, pandemic, three weeks time was granted to assessee to file the application for stay before CIT(A). In case such application is filed, CIT(A) would decide the application for stay within one month thereafter, after affording an opportunity of hearing to the parties and in accordance with law.

REFERRED :

FAVOUR : Directions issued

A.Y. :

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